Cost of production from offshore wells also coming down
The costs of expensive deep-water oil projects have shrunk by a fifth on average since crude prices collapsed in the summer of 2014, Wood Mackenzie said in a recent report.It nows appears that the biggest mistake OPEC has made in recent years is to try to drive US producers out of business using predatory pricing. It has backfired on them big time and the result is even greater competition for the cartel and for none members like Russia. It was a strategic blunder that they still have not recovered from.
The energy research firm believes unapproved deep-water projects that could reach some 5 billion barrels of oil would yield investment returns at $50 a barrel oil.
That has made the prospect of launching these offshore projects more palatable even with low oil prices and competition for resources from U.S. shale plays. The cost reductions come from lower rig prices and moves to redesign projects and pump higher quantities of oil from wells, Wood Mackenzie said.
BP, Royal Dutch Shell and Noble Energy have launched three major deep-water projects this year, and the research firm expects to see an increase in project approvals this year.